I was recently invited by an American friend, Dr. Stuart Rosenfeld, to think about collaboration on creative economies. Among other things, he’s a Board member of South Arts, a creative arts network covering nine states – Alabama, Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina and Tennessee.

I readily agreed on the proviso that any collaboration should extend to both the creative AND tourism industries because of their complementarity. There were also other timely reasons:

– Cultural tourism is the fastest growing segment of the tourism market, and has a high spend value.
– The Australian tourism market is flat, and Tourism Australia is looking for new markets. And we figured the Yanks are in the same boat.
– Qantas now has Dallas as its main US hub – a great gateway to the relatively untapped southern US market. Qantas and the US carriers surely want to drum up two-way business.
– In March, the Australian Government announced a Creative Arts Program ($235 million) AND a Precincts (Clusters) Program ($500 million for 10 precincts), with a creative arts precinct a distinct possibility.

We thus decided that the planets were in alignment. But, as always, the solution lies in finding the stakeholders with the vision and commitment to make something happen. It seems smart to think of Sydney as the Aussie precinct connected to counterparts in the USA. After all it’s the main entry point for US artists and tourists, and there are two precincts forming around University Technology Sydney, and Walsh Bay – the Rocks.

But Melbourne and other places have equally long and proud histories in the creative industries and strong international links. In any case, it’s our rural regions that appeal most to international tourists – disparate places like Bendigo, Katoomba, Broken Hill, Tamworth, Gladstone, Alice Springs, Cape York, Broome etc. The dilemma is that while the regions have cultural tourism product, much of it is under-developed and hard to get to – regional airfares outside the main trunk routes are crippling, and you’d be loathe to recommend most of our train services to international tourists.

But let’s not dwell on the negatives. We have some fascinating cultural tourism agendas that might form the basis of relationships with cities and towns in southern USA – New Orleans, Dallas, Memphis, Nashville, Houston and Miami come to mind.

We’ve fired off a discussion paper for Dr. Rosenfeld for his next Board meeting. The first hurdle is to get arts administrators thinking tourism, and tourism administrators thinking arts. The second hurdle is to get US tourism/arts administrators engaging with their Australian counterparts, and then somehow connecting their regional cousins into the agenda. The third hurdle is to market the opportunity. On this score, we’ve suggested engaging some champions once things take shape e.g. Harry Connick Jnr. (New Orleans) and Nicole Kidman & Keith Urban (Nashville).

The above scenarios are somewhat speculative, and it involves a lot of cat-herding and people looking to someone else to arrange things. If it doesn’t pan out with our American friends, we might see if there are cultural tourism links back to Italy for Griffith, Mareeba and Leichhardt, or to South Africa in the case of Perth. We’ve found a federal program to defray expenses – so please contact us if this aligns with your interests.

Contact Rod Brown, Cockatoo Network – apdcockatoo@iprimus.com.au if you would ike to collaborate in this field.

A Cockatoo member recently asked for the name of the shadow Minister for Urban Affairs. Tough question. So I rang the Liberal Party HQ. ‘There isn’t one’ came the reply.

So I rang the Office of Warren Truss, shadow minister for infrastructure and transport. His staffer said that urban affairs is a state issue. ‘Not true!’ I countered. But she stuck to her guns and double-checked with another adviser – same message.

I respectfully suggested that the federal government MUST play in this field because of its responsibilities in the environment, infrastructure, building and planning codes, housing and community services etc. Still no traction, but we parted on cordial terms.

Urban councils need to an active interest here. At the very least, an Abbott Government needs a savvy young parliamentary secretary to the Minister for Infrastructure & Transport – to liaise with the States and local government and coordinate the many federal agencies in this critical area. This would allow Minister Truss to focus on the traditional love of the National Party.

My grandfather was a blacksmith in Trafalgar (Vic) and in the 1930s he became the local Ford dealer. His sons later ran the business as it expanded to Warragul and Pakenham. In the 1960s, Prefects and Zephyrs gave way to the mighty Falcon and the less-impressive Cortinas. On Sundays in October we sat transfixed in front of the TV watching the Bathurst 500 as Allan Moffat and Dick Johnson threw their Falcons around the track against the enemy Holden Toranas of Peter Brock and Colin Bond.

I think I need a shrink. I still can’t bring myself to hire a Holden at the airport, and my dog and I cruise around Canberra in my beloved Falcon. My wife and kids tell me to get with it, and to buy something decent.

I suspect that my personal mea culpa is just one of countless being offered following Ford’s recent decision to exit car manufacturing in Australia. It is additionally galling given Ford has received some $1.1 billion in federal assistance over the past decade. And to add further pain, Ford Australia President, Mr. Bob Graziano, then puts out a smokescreen that the cost of manufacturing a car in Australia is double that in Europe and four times that in Asia!

If that’s the case, was the federal government really thinking it could close the gap with subsidies? We’ll never know, but Graziano’s figures have been accepted as gospel and everyone is blithely accepting that the root causes are the high $A, the volume sensitivity of car production, and Ford’s inability to align its models with consumer preferences.

Well, the focus will now surely shift to co-investments (lovely word that) with Toyota and Holden. It is incumbent on the feds that they know how these two companies’ local operations measure up against their competitors in Thailand, South Korea, China etc. Without this information any federal assistance will be more blind faith. In this regard, you might note that there hasn’t been a full-blown Productivity Commission report on the industry since 2002! Shadow Minister Mirabella has stated that there will be a PC review of the car industry. It cannot come soon enough.

Value chains the answer

A value chain is a fancy word for supply chain. David Gregory, a Cockatoo colleague here in Canberra, is an expert in this field, and says that we made a fundamental mistake with industry policy in the 1970s by (i) supporting five car manufacturers in Australia, and (ii) focusing on industries. He argues that the reality is that industries don’t compete, businesses do – and there is often a huge difference between businesses within an industry in terms of their competitive performance.

David goes on to suggest that industry policy should be about fostering collaboration between high performing like-minded businesses within value chains. By such an approach, businesses can identify and deliver consumer value to specifically targeted consumers.

What has all of this got to do with local government? A lot. Local councils are well situated to help foster collaboration along these supply chains. Economic development managers can be helping the industry associations to align the parties – because the feds aren’t in this space any more.

THIS ARTICLE APPEARS IN THE JUNE 2013 EDITION OF LOCAL GOVERNMENT FOCUS

Legislation to further strengthen Australia’s anti-dumping regime recently passed through the Parliament and will operate from 1 July 2003.

These changes are consistent with Australia’s WTO and other international trade obligations and will bring the system more into line with the approach taken by the US and Europe.

They include establishing a new Anti-Dumping Commission, a funding boost for the anti-dumping system, improved responsiveness, efficiency and effectiveness and reduced cost and complexity for users.

Dumping – definition

Dumping occurs when export prices are below normal selling prices in the exporting country. Import duties can be imposed when it causes or threatens material injury to the industry producing like goods in the importing country. Likewise subsidies that have a similar effect are actionable by countervailing duties.

The new Commission will be based in Melbourne and the additional resources are expected to lead to improved response times, more rigorous analysis, less red tape, better transparency and improve public confidence in the system.

The law surrounding the application of retroactive duties is to be clarified and simplified while a new review mechanism and increased penalties will deal with circumvention of duty arrangements by importers. Duties will also be leviable at the full dumping margin in many cases rather than at a level just sufficient to offset the injury.

These reforms will be introduced in consultation with the International Trade Remedies Forum, a stakeholder body established to provide strategic advice and feedback to government on the operation of the system.

These reforms complement the changes implemented in June 2011 that improved the timeliness of investigations, increased resources, improved decision making and provided greater access to the system to small and medium sized enterprises.

The government says it remains committed to an open trade environment and remains a strong defender of the rules governing international trade. As there is no international agreement on anti-competitive practices, an anti-dumping system is the only means of countering unfair market behaviour globally.

The message is clear for those exporting goods to Australia and for importers alike – follow the rules or be prepared to accept substantially stiffer penalties for non-compliance.

Nestled in the foothills of the Alps-Maritime, some fifteen minutes by car from the French Riviera, lies the ancient walled village of St Paul de Vence.

Located on a rocky promontory, the former Roman garrison site dates back 2,000 years and is spread over two acres – comprising a chapel, cemetery, chateau, homes and galleries. Narrow cobbled laneways lead tourists to sculptures, museums and art and craft stores. And overlooking the distant Mediterranean the hills and valleys around St Paul are covered with olive groves, flowers and vines just as they were centuries ago.

Artists began frequenting St Paul in the 1920s attracted by the village’s brown stone, colourful rolling hills and rich intense light. The trailblazers were Paul Signac, Raoul Dufy and Chaim Soutine. They were later followed by Picasso, Fernand Leger, Marc Chagall and Henri Matisse who was based at Vence a few kilometres away. Through the twentieth century actors, writers and artists made St Paul into a bubbling cultural centre. The 1950s and 60s were the village’s golden age when film making put it on the international stage as world famous directors and actors were attracted by the Victorine film studio and the proximity to Cannes Film Festival.

Today there are some 25 galleries displaying art works ranging from modern through contemporary, fringe and naïve across all forms including traditional painting, sculpture, textiles, jewellery and plastics along with four museums.

What attracted me to visit St Paul was a suggestion that this artistic enclave owes its success to government funding, that it seeded the establishment of this thriving art community. So I set out to investigate.

Talking to several shop owners who had been there for decades, all looked at me aghast at the suggestion of government money. Non, non, non! They originally came because St Paul offered the scenery and light, they stayed because their work became popular – there were no handouts then and there are no handouts now! “We pay commercial rents for our shops and get no government help’ was the common view.

Today there are only a handful of local painters, and they haven’t achieved the recognition of their predecessors. The art is now sourced from all over Europe. As one shop owner said, art is a specialised business, we operate in a particular segment and we have to cater to an international market which is constantly changing and evolving, we cannot just keep stocking what was popular last year or the year before, we have to stay abreast of changing tastes, we have to know our market intimately and continually adjust to it. There can be no loyalty to any local artist, not if we want to survive.

Contributed by Peter Kittler (Canberra), a consultant to the Cockatoo Network – peterkittler@hotmail.com

Australia’s long-awaited Industry & Innovation Statement, released in February, provides an intriguing opportunity for local councils.

It stems from the announcement of ten Innovation Precincts, with $500 million funding. As I’ve foreshadowed in recent months, these will be established in areas of current Australian competitive advantage like manufacturing, food, finance and resources and up to five Precincts will support emerging opportunities – their focus will be on industries with strong export potential.

Melbourne is to be a food precinct under the new arrangements, which is very interesting given that most manufacturers have moved out to Cranbourne, Shepparton, Ballarat, Bairnsdale etc. Perhaps the CSIRO and the Australian Research Council, whose influence and/or facilities lie in Melbourne, had a big say in the decision?

The reality is that for certain industries, urban agglomerations of research infrastructure, plant, equipment and workers are important e.g. finance, IT, biotech and pharmaceuticals. However this isn’t the case for the food, timber, metals and engineering industries.

The configuration and location of most of the precincts have yet to be decided.

The opportunity is thus for regional cities and towns to negotiate and lobby their way into these precincts, including the afore-mentioned food precinct, especially since the government would be open to sensible propositions at a time of a hung Parliament. We’re now scheduling meetings with the industry and regional development departments to discuss how regional hubs can be positioned in the new arrangements. If your Council has an interest in this dialogue, please contact us ASAP.

Clusters and supply chains

The Industry Statement actually uses the terms precinct and cluster interchangeably, which is nice after our decade of effort in opening federal policymakers’ eyes to the potential of clusters. We must thank my colleague Professor Roy Green (UTS) for his leadership on this.

To explain, a few years back our Cockatoo members identified some 100 industry clusters around Australia. We have been dropping hints about they could form the basis of a new industry policy, especially given that localised processes are increasingly important.

For example, in South Australia we identified clusters of differing sizes in horticulture (Virginia, Riverland, Hahndorf), seafood (Port Lincoln), automotive and engineering (northern Adelaide), wine (Barossa and Clare Valleys), food (northern Adelaide), minerals and metals Upper Spencer Gulf) The defining features of each of these clusters are the specialisation and critical mass that helps them build supply chains into global markets. I will identify more of these clusters next month.

The Industry Statement touches on the importance of supply chains. We believe there is real scope for companies to now engage with the federal government to think about how high-value global supply chains can be nurtured in association with these clusters and precincts. Once again, please forward your ideas!

Defensive measures

As mentioned above, the Statement had a defensive component, presumably crafted by the manufacturing unions. It involves increased vigilance on cheap imports via anti-dumping action. The reality is that many foreign companies are selling their goods into our market at cost just to keep their operations going. But an anti-dumping program will not prevent these practices, and anti-dumping cases are excruciating slow.

A beefed-up Australian Participation Program, to seek higher levels of Australian content in major resource and engineering projects, will also be sought. However our signing of Free Trade Agreements means that we can no longer mandate particular levels of local content for these projects.

Innovation grants

The third leg of the Statement involves $350 million in a new round of the Innovation Investment Fund program to stimulate private investment in Australian start-ups. There is also a new competitive Industry Collaboration Fund (up to $50 million a year). This is all a little murky because the offset savings are linked to reducing the eligibility of the resource companies to R&D grants.

In any event, Shadow Minister Sophie Mirabella is the one to watch. She has not yet ruled anything in or out.

Greece is at a critical point in its long and proud history. Its ability to overcome its economic difficulties will arguably depend on forging new global partnerships with external players.

To this end, the Cockatoo Network is interested in identifying how and where joint ventures might be developed between Greek and Australian businesses as part of Greece’s recovery program – the rationale is that Australia has weathered the GFC relatively well, it has companies hungry to expand into new global markets, and our nations have a strong cultural and social affinity that can underpin the commercial relationship.

The problem however is that new trade and investment joint ventures do not come easily. In our experience, the biggest problem is information failure – the likely partners are not aware of each other and the support agencies are not sufficiently connected. The process of engagement is therefore slow and often a matter of luck. We want to speed this process and bring a new dynamic into the relationship via the linking of companies with collaborative mindsets. The key roles of the Cockatoo Network will be to:

1. Identify the mutual business opportunities for Australian and Greek companies.
2. Present these opportunities to the relevant companies.
3. Engage other relevant stakeholders, including support agencies.

We are currently in discussions with the Australian Government, industry chambers and industry associations. If you have a likely interest in this subject – wherever you are – please contact us ASAP.

Russ Fletcher (Montana Roundtable, USA) has forwarded the link to a very, very good analysis by the US National Intelligence Council – provides a framework for thinking about the future. You will note some bias, but that is understandable. Below is a sample – the identification of four megatrends:

“Democratic deficits are said to exist when a country’s developmental level is more advanced than its level of governance. Democratic deficits are tinder that might be ignited by various sparks. Our modeling – based on the International Futures model – highlights many of the Gulf, Middle East and Central Asia countries – Qatar, the UAE, Bahrain, Saudi Arabia, Oman, Kuwait, Iran, Kazakhstan, Azerbaijan – and Asian countries such as China and Vietnam. This set of countries is very different from the “usual suspects” lists provided by indices of state fragility or failure.”

The gist of the article is that off-shoring has peaked i.e. the shift of manufacturing to low-wage countries has slowed because labour costs are becoming less important. For example, a $499 first-generation iPad has only $33 of manufacturing labour, of which final assembly in China accounts for just $8.

The article makes the claim, echoed elsewhere in international circles, that companies want to be closer to their customers so that they can respond more quickly to changes in demand. A related factor is that with sophisticated products, it helps to have the people who design them and the people who make them in the same place. The Boston Consulting Group estimates that in areas such as transport, computers, fabricated metals and machinery, 10-30% of the goods that America now imports from China could be made back home by 2020.

Well this makes intuitive sense. Let’s certainly hope so. The importance of proximity to customers, designers, suppliers etc. bodes well for the precinct agendas described above.

The European Commission is much involved in urban and regional development thinking, and it has been promoting the Smart Specialisation concept. It basically involves EC regions specialising in activities that align with their competitive advantages. And the Commission offers financial inducements to this end.

Now the churlish might argue that this policy shift has come a bit late to help Greece, Spain and Portugal. But the truth is that ‘regions’ hold a lot of sway in Europe – they are a fundamental part of its social and industrial fabric.

Alfred Marshall (Principles of Economics, 1890) was espousing this stuff more than a century ago. He talked about particular locations having types of specialization. Indeed he anticipated later discussion of the role of place as a point of information exchanges, and of innovation developing through that “something in the air” that arises when people mingle and exchange ideas. He identified four particular features of precincts – knowledge spillovers as a result of informal networking; access to a common pool of factors of production such as labour or R&D facilities; specialisation of production within supply chains; and the facilitation of ‘comparison shopping’ for buyers.

Precincts are, by the way, akin in some ways to clusters, and the Cockatoo Network is quick to highlight this to government officials who still think clusters are about picking winners. Rubbish of course.

Five tips for facilitating specialisations and precincts

It makes good sense for councils and regional stakeholders to use local specialisation and precinct concepts in their lobbying efforts to government agencies. Below are some suggested initiatives that could complement your lobbying effort. Contact us for support (naturally!).

2. Get international agencies to study or talk about your area of specialisation – Cockatoo members regularly work with the OECD or UN agencies to raise awareness of their regions.

3. Commission university studies on national issues at your local level – these can be good copy for national newspapers, which then educate external audiences about your local specialisation.
4. Leverage your champions – they are in your midst.
5. Do something bold and innovative – all towns, cities and suburbs have specialisations, but they’re hidden to the outside world. A bold project can lift the specialisation profile.